Shocking Truth: How a ‘Seriously Delinquent Tax Debt’ Can Lead to Passport Revocation and Ruin Your Travel Dreams
Travelers Beware: Missing a Big Tax Bill Could Cost You Your Passport
The federal government is increasingly revoking passports for Americans with significant overdue tax bills. Since 2018, the IRS and Treasury Department have been obliged by federal law to alert the State Department if an individual’s unpaid federal tax debt exceeds $62,000—a threshold adjusted annually for inflation and inclusive of penalties and interest.
The State Department often denies, revokes, or restricts passports for those with serious tax delinquencies. This enforcement tool, used as a final measure to recover owed taxes, has grown more common recently, according to experts. The increasing preference for this method aligns with a surge in passport applications and international travel post-pandemic.
CPA Todd Whalen noted a rise in such cases over the past three years, emphasizing that passport revocation is effective in prompting taxpayers to negotiate with the IRS. He recounted an incident where a client discovered their passport had been revoked only at the airport.
Prior to taking such drastic steps, the IRS must have exhausted other collection options, such as issuing federal tax liens. Taxpayers should receive notice (CP508C) to inform them of their debt status and potential passport implications. This allows individuals to address their debts by full payment, setting up a payment plan, or agreeing to a compromise with the IRS.
Despite these steps, surprises still occur. Incorrect addresses can result in taxpayers not receiving crucial notices until facing travel disruptions. The IRS does provide opportunities to rectify situations, such as the Letter 6152, which gives a 30-day window to resolve outstanding debts before passport cancellation.
Therefore, travelers should be vigilant about resolving any large tax debts to avoid unexpected passport issues and travel disruptions.
Original Story https://www.cnbc.com/2024/08/25/how-a-seriously-delinquent-tax-debt-could-get-your-passport-revoked.html
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